Euro continued to fall against the U.S. dollar to hit a six month low in the Asian session as concerns are mounting over a Greek default especially after Germany began openly preparing how to support German banks in case of Greece going bankrupt. EURUSD touched as low as 1.3551. The resignation of a top German European Central Bank board member, Juergen Stark, highlighted division within the bank and its inability to tackle the worsening euro zone debt crisis. Also there is speculation that major French banks like BNP and Societe Generale may have their ratings cut by Moody’s Investors Service this week because of Greek holdings.
GBPUSD opened 1.5829 and fell to a two month low to 1.5819 as investors flight from risk also affected sterling and shored up the U.S. dollar across the board. Investors nervous about Greece and debt contagion to other countries in the European area cause them to escape to the safe haven dollar.
USDCHF hit a four month high at 0.8927 as the dollar extended solid gains against the Swiss franc as investors sought a safe haven due to increasing risk aversion in the currency markets based on euro zone debt concerns. The U.S dollar is stronger across the board even against the traditional safe haven Swiss franc because after the Swiss National Bank intervention to curb franc strength on September 6, investors are unwilling to shore up the franc and prefer the dollar. The SNB imposed a ceiling on the franc for the first time in more than three decades.
The Australian dollar declined in the Asian session below its 200-day moving average touching a three week low against the U.S. dollar at 1.0358 as risk appetite fell on fears that the global economy will be dealt a severe blow if the euro zone debt woes deepen. Continued slowdown in global growth increases speculation that the Reserve Bank of Australia will cut interest rates. However, Australia’s strong trade surplus data released today show that the economy will remain resilient and demand for gold will help keep the aussie supported.
EURJPY hit its lowest level since June 2001 as investors dump the euro in favour of the safe haven yen. Sentiment is very poor and investors are valuing European banks at levels not seen since the depths of the credit crunch that followed the collapse of Lehman Brothers Holdings Inc. as concern over a Greek default and debt contagion escalates. EURJPY touched a low of 104.25 from the open of 105.17.